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The impact of coordination of monetary policy and macroprudential policy on systemic risks in the real estate market

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  • Song, Yue
  • Zhang, Yu

Abstract

This paper empirically examines the impact of monetary and macroprudential policies on systemic risk in the real estate market using quarterly data from 35 major cities in China from 2009Q1 to 2020Q4. We find that the tightening monetary policy strengthens the restraining effect of macroprudential policy on the upside risk in the real estate market, and this restraining effect is much more pronounced in China’s Tier 1 and Tier 2 cities. Mechanism analysis demonstrates that the co-effect of quantitative monetary policy and macroprudential policy restrains the upside risk by reducing the household mortgage leverage and suppressing the optimistic sentiment in the real estate market, but the co-effect of price-based monetary policy and macroprudential policy operates solely through the household mortgage leverage channel. Further analysis indicates that the coordination of monetary policy and macroprudential policy in countercyclical regulation can also mitigate the downside risk in the real estate market. Our findings contribute to understanding how the coordination between monetary policy and macroprudential policy can effectively mitigate systemic risk in the real estate market.

Suggested Citation

  • Song, Yue & Zhang, Yu, 2026. "The impact of coordination of monetary policy and macroprudential policy on systemic risks in the real estate market," The North American Journal of Economics and Finance, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:ecofin:v:84:y:2026:i:c:s1062940826000434
    DOI: 10.1016/j.najef.2026.102621
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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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